Very newbie question

So my girlfriend and I will be moving into her grandmothers home near the end of November, so I want to get a jumpstart on the updating. The first thing I want to do is get the thin wood paneling and popcorn ceiling in the living room taken care of. The ceiling isn't painted over, so I'm not worried about that too much. What I am worried about is what's behind the paneling. The home is older, her grandmother moved in to it in 1979 and that paneling was already up. Today I was over there checking it out and the paneling is buckling from the wall so I carefully pulled a section off enough to see what was behind it. The panel is nailed and also glued to the wall. Now my question, is this plaster, sheetrock, or plaster on top of sheet rock? How do I repair this and get it ready for paint? Drywall doesn't bother me but I have no idea about this stuff. Here are some pictures of what I'll be working with next weekend.